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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 ) In re Petition of ) ) KTEN Television Limited Partnership ) CSR-4675-A ) For Modification of Market of ) Station KTEN-TV ) MEMORANDUM OPINION AND ORDER Adopted: August 15, 1996 Released: August 23, 1996 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1. KTEN Television Limited Partnership ("KTEN"), filed the above-captioned petition, pursuant to 47 C.F.R.  76.7 and 76.59, requesting that the television market of its television station KTEN-TV (Channel 10, Ada, Oklahoma) ("KTEN-TV") be modified to include Grayson County, Texas for purposes of determining must-carry rights under 47 U.S.C.  534 on those cable systems. The petition was subsequently amended to request that KTEN-TV's market be modified to include the following communities located in Grayson County, Texas: Bells, Collinsville, Denison, West Denison, East Denison, Gordonville, Howe, Pottsboro, Preston Peninsula, Sadler, Sherman, Sherwood Shores, Tom Bean, Van Alstyne, Whitesboro, and Whitewright, Texas (herein "Grayson Communities.") The petition and amended petition are unopposed. BACKGROUND 2. Pursuant to Section 614 of the Communications Act of 1934, as amended by the Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act"), and implementing rules adopted by the Commission in its Report and Order in MM Docket 92- 259, commercial television broadcast stations are entitled to assert mandatory carriage rights on cable systems located within the station's market. A station's market for this purpose is its "area of dominant influence" or ADI as defined by the Arbitron audience research organization. An ADI is a geographic market designation that defines each television market exclusive of others, based on measured viewing patterns. Essentially, each county in the United States is allocated to a market based on which home-market stations receive a preponderance of total viewing hours in the county. For purposes of this calculation, both over-the-air and cable television viewing are included. 3. Under the Act, however, the Commission is also directed to consider changes in market areas. Section 4 provides that the Commission may: with respect to a particular television broadcast station, include additional communities within its television market or exclude communities from such station's television market to better effectuate the purposes of this section. In considering such requests, the Act provides that: the Commission shall afford particular attention to the value of localism by taking into account such factors as -- (I) whether the station, or other stations located in the same area, have been historically carried on the cable system or systems within such community; (II) whether the television station provides coverage or other local service to such community; (III) whether any other television station that is eligible to be carried by a cable system in such community in fulfillment of the requirements of this section provides news coverage of issues of concern to such community or provides carriage or coverage of sporting and other events of interest to the community; and (IV) evidence of viewing patterns in cable and noncable households within the areas served by the cable system or systems in such community. 4. The legislative history of this provision indicates that: where the presumption in favor of ADI carriage would result in cable subscribers losing access to local stations because they are outside the ADI in which a local cable system operates, the FCC may make an adjustment to include or exclude particular communities from a television station's market consistent with Congress' objective to ensure that television stations be carried in the areas which they serve and which form their economic market. * * * * * [This subsection] establishes certain criteria which the Commission shall consider in acting on requests to modify the geographic area in which stations have signal carriage rights. These factors are not intended to be exclusive, but may be used to demonstrate that a community is part of a particular station's market. 5. The Commission provided guidance in its Report and Order in MM Docket 92- 259, supra, to aid decision making in these matters, as follows: For example, the historical carriage of the station could be illustrated by the submission of documents listing the cable system's channel line-up (e.g., rate cards) for a period of years. To show that the station provides coverage or other local service to the cable community (factor 2), parties may demonstrate that the station places at least a Grade B coverage contour over the cable community or is located close to the community in terms of mileage. Coverage of news or other programming of interest to the community could be demonstrated by program logs or other descriptions of local program offerings. The final factor concerns viewing patterns in the cable community in cable and noncable homes. Audience data clearly provide appropriate evidence about this factor. In this regard, we note that surveys such as those used to demonstrate significantly viewed status could be useful. However, since this factor requires us to evaluate viewing on a community basis for cable and noncable homes, and significantly viewed surveys typically measure viewing only in noncable households, such surveys may need to be supplemented with additional data concerning viewing in cable homes. 6. In adopting rules to implement this provision, the Commission indicated that changes requested should be considered on a community-by-community basis rather than on a county-by-county basis and that they should be treated as specific to particular stations rather than applicable in common to all stations in the market. The rules further provide, in accordance with the requirements of the Act, that a station not be deleted from carriage during the pendency of a market change request. 7. Adding communities to a station's market generally entitles that station to insist on cable carriage in those communities. However, this right is subject to several conditions: 1) a cable system operator is generally required to devote no more than one-third of its activated channel capacity to compliance with the mandatory signal carriage obligations, 2) the station is responsible for delivering a good quality signal to the principal headend of the system, 3) indemnification may be required for any increase in copyright liability resulting from carriage, and 4) the system operator is not required to carry the signal of any station whose signal substantially duplicates the signal of any other local signal carried or the signals of more than one local station affiliated with a particular broadcast network. If, pursuant to these requirements, a system operator elects to carry the signal of only a single affiliate of a broadcast network, it is obliged to carry the affiliate from within the market whose city of license is closest to the principal headend of the cable system. Accordingly, based on the specific circumstances involved, the addition of communities to a station's market may guarantee it cable carriage and specific channel position rights, or it may simply provide the system operator with an expanded list of must-carry signals from which to choose. The latter case may arise when the cable system has used up its channel capacity mandated for broadcast signals carriage, or when duplicating network affiliated stations become entitled to carriage. Also, the removal of a community from a station's market will defeat a station's cable carriage and channel position rights on a cable system serving the community. MARKET FACTS AND ARGUMENT 8. KTEN-TV is a television station licensed to Ada, Oklahoma. It is located in the Ardmore-Ada, Oklahoma ADI, as defined in Arbitron's 1991-1992 Television ADI Market Guide. KTEN asserts that the Grayson Communities, which are located in Grayson County, Texas just across the Oklahoma-Texas border but adjacent to the Ardmore-Ada ADI, are a vital part of KTEN-TV's market area and for that reason should be included in the station's television market for must-carry purposes. KTEN points out that KTEN-TV is also located in Nielsen's Sherman, Texas-Ada, Oklahoma DMA (Market #159), which has essentially the same boundaries as KTEN-TV's ADI, but which since November 1994 has also included Grayson County, Texas and the Grayson Communities. 9. KTEN contends that, since Arbitron stopped publication of market data at the end of 1993, the broadcast industry has generally used Nielsen DMAs and other market statistics published by Nielsen to gauge viewing patterns for individual stations. According to KTEN, the Nielsen DMAs have come to be the most reliable and current television market area indicator available for use by the broadcast industry. It notes in this connection that the Commission is currently addressing, in a recently initiated rulemaking proceeding, the question of whether Nielsen DMAs would better define television markets. KTEN states that, under the three year cycle of must-carry election periods, its station will not benefit from any Commission decision to use Nielsen DMAs until January 1, 1997. It therefore requests that relief be granted immediately. 10. The requested relief is needed, KTEN alleges, to preserve the economic vitality of its station and to ensure that all viewers in KTEN-TV's broadcast area have opportunity to view the station. KTEN contends that considering the Grayson Communities part of KTEN- TV's local market is consistent with changes in viewing patterns and general regional growth that has occurred in the Sherman, Texas-Ada, Oklahoma area recently, a change that the recent inclusion by Nielsen of Grayson County in the Sherman, Texas-Ada, Oklahoma DMA recognizes. Grayson County is a full fifty four percent of the size of the entire Ardmore-Ada ADI as measured by 1994 television household statistics, KTEN asserts, and Grayson Communities viewers account for more than a third of the Sherman-Ada DMA total. It notes, too, that sixty nine percent of Grayson Communities households subscribe to cable service. However, KTEN says its station cannot reach those cable subscribers, because the station cannot assert must-carry rights on any cable system in the Grayson Communities. 11. KTEN contrasts its circumstances with that of station KXII-TV, with whom it competes for viewing audience. KTEN notes that, although the signal contours of KXII-TV reach further south of Grayson County than does that of KTEN-TV, KTEN-TV's Grade B signal also extends past the southern border of the county and its Grade A signal covers almost half of Grayson County. KTEN therefore contends that KTEN-TV's signal coverage area, including coverage of Grayson County, is substantially similar to that provided by KXII- TV. KTEN asserts that despite having substantially similar coverage areas and thus competing for viewers, the two stations are achieving substantially dissimilar results. It attributes the different results to the fact that KTEN-TV cannot reach many of the nearly seventy percent of viewers on cable systems in the Grayson Communities. However, KXII- TV, whose city of license was changed to Sherman, Texas in 1992 and thus gained must- carry rights on cable systems in the Grayson Communities located in Grayson County, does reach viewers in those Grayson Communities. KTEN asserts that KTEN-TV's ratings have dropped an average of thirty five percent for key revenue programs since November 1994. KTEN translates that loss of ratings to a loss to KTEN-TV of more than 25,000 viewers in the Grayson Communities. KTEN estimates that such ratings loss equates to an advertising revenue loss of some $500,000 annually. 12. KTEN contends that when the two station competed on equal footing in the Ardmore-Ada ADI, the stations' ratings were consistently close, with KTEN leading KXII-TV by three to five points during 1987 and 1988. KTEN asserts that the two stations compete for viewers and advertising in the same way any two stations in the same local market would ordinarily compete. However, with its change of city of license, KXII-TV gained entitlement to carriage on cable systems in the Dallas ADI, which includes Sherman, Texas, the county seat of Grayson County. KTEN notes further that KXII-TV is still carried on cable systems in the Ardmore-Ada ADI, although no longer entitled to mandatory carriage there. KTEN attributes a loss of thirty five rating points since 1994 to KTEN-TV's not having access to carriage on cable systems in the Grayson Communities in the same manner as does KXII-TV. 13. KTEN asserts that access to viewers on cable systems located in the Grayson Communities would permit KTEN-TV to compete more evenly with KXII-TV, to whom it has lost substantial ground in share ratings since KXII-TV changed its city of license. In support of this assertion, KTEN submitted information showing that its market share was less than a third of that of KXII-TV in 1994. KTEN argues that if it is not permitted to compete more evenly with KXII-TV, continued revenue losses may force it to decrease service to existing viewers who do not subscribe to cable, a result that KTEN asserts is clearly contrary to the public interest of viewers in KTEN-TV's broadcast market area. ANALYSIS AND DECISION 14. As a preliminary matter, we note that Station KTEN-TV is licensed to Ada, Oklahoma, which is in the Ardmore-Ada, Oklahoma ADI. Grayson County, Texas is listed as being in the Dallas, Texas ADI. Grayson County is listed in Nielsen's Sherman, Texas-Ada, Oklahoma DMA. We note additionally that the transmitters of KTEN-TV and KXII-TV are both located in Oklahoma within about twenty six miles of each other, and both stations place a predicted Grade B or better signal over all of Grayson County (KTEN-TV's Grade A signal covers almost half of Grayson County). Since November 1992, the city of license of KXII-TV has been Sherman (Grayson County), Texas, which is in the Dallas ADI and within Nielsen's Sherman, Texas-Ada, Oklahoma DMA. Because Grayson County is not in the Ardmore-Ada ADI, KTEN-TV is not entitled to carriage on cable systems located in the Grayson Communities. However, KXII-TV, a station with which KTEN-TV competes, is entitled to carriage in Grayson County, its home county, where cable systems are shown as having a nearly seventy percent penetration rate. 15. As noted above, the Commission has provided guidance for our resolution of this request. First, we observe that KTEN-TV has historically been carried on many of the cable systems in the Grayson Communities and continues to be carried on most pursuant to negotiated retransmission consent agreements. Of all the cable systems in the County, only three are not carrying the KTEN-TV signal and one of these has expressed an interest in carrying it in the future. This carriage pattern, in the absence of any carriage obligation, is a strong indication of interest in the signal and of its market connection with the Grayson Communities. 16. Next, we note that available audience viewing data shows KTEN having an eight audience share among over-the-air viewers in Grayson County. Combining cable and over-the-air viewers, the Nielsen Station Index data for Grayson County shows KTEN-TV with only a four total share in the county. This indicates that KTEN is widely available within the county and suggests that the absence of cable carriage on some systems is impeding KTEN's access to its natural market area. KTEN-TV also provides good community coverage by placing a Grade A signal over a large portion of Grayson County and a Grade B signal over all of that county. KTEN-TV also asserts that it provides regular and extensive coverage of Grayson County local news and other events of interest to viewers in Grayson County. 17. Finally, we note that in its Report and Order in Docket 95-178, the Commission reviewed the regulations applicable to the determination of local markets for purposes of the mandatory carriage and retransmission consent provisions of Section 614 of the Communications Act. The Commission there determined to continue the use of Arbitron's 1991-1992 Television ADI Market Guide market designations for the 1996 must carry/retransmission consent election and to postpone the switch to Nielsen Media Research's designated market areas ("DMAs") until the election that is to take place on October 1, 1999. However, in the interim, in determining market modifications pursuant to Section 614(h), the Commission recognized that information regarding DMAs may be useful in deciding individual cases. In the instant case, Grayson County and the Grayson Communities have been included since November 1994 in the Sherman, Texas-Ada, Oklahoma DMA, the DMA in which KTEN-TV is located. That recent inclusion of the Grayson Communities in this DMA is reflective of changes in viewing patterns and market conditions occurring within KTEN-TV's signal coverage area and supports our conclusion to add the Grayson Communities to that station's local television market. 18. In sum, we believe that inclusion of the Grayson Communities in the market of KTEN-TV will better effectuate the purposes of Section 614(h) of the Communications Act, as amended, and our must-carry regulations. In particular in this regard, KTEN-TV will be better able to reach the nearly seventy percent of Grayson County households served by cable systems in the Grayson Communities located within the station's Grade B or better signal area. We also believe that grant of the relief requested will also give KTEN-TV an opportunity to compete more equitably with KXII-TV in a market area shared by both stations. ORDER 19. Accordingly, IT IS ORDERED, pursuant to Section 614(h)(1)(C) of the Communications Act of 1934, as amended, 47 U.S.C. 534(h)(1)(C), and Section 76.59 of the Commission's Rules, 47 C.F.R. 76.59, that the petition for special relief filed on February 12, 1996, as amended on June 28, 1996, by KTEN Television Limited Partnership in File No. CSR 4675-A IS GRANTED. This change shall be effective in accordance with the following schedule: KTEN-TV shall notify the cable systems in question in writing of its carriage and channel position elections (76.56, 76.57, and 76.64(f) of the Commission's rules) within 30 days of the release date of this Memorandum Opinion and Order. The affected cable systems shall come into compliance with the applicable rules within 60 days of the above notice. 20. This Action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules, 47 C.F.R.  0.321. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau